BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Omonike Robinson-Pickering, Iona Wright, Lucy Frew and Sara Hall, Walkers
12%. In general, a BVI bank must not, without the FSC’s prior written approval, incur: • an aggregate exposure to a counterparty or related counterparties that exceeds 25% of its capital base; or • large exposures that in aggregate exceed 800% of the bank’s capital base. General banking licence holders are required to have a minimum fully paid-up capital of not less than USD2 million or its equivalent in foreign currencies, or such sum as the FSC, by order determines, and have deposited or invested the sum of USD500,000 in such manner as the FSC by order, prescribes. Restricted class I and class II licence holders are required to have a minimum fully paid-up capital of not less than USD1 million or its equivalent in foreign currencies, or such sum as the FSC, by order determines, and have deposited or invest - ed the sum of USD500,000 in such manner as the FSC by order, prescribes. A BVI bank must establish and maintain an appropriate liquidity strategy and policies, along with effective systems and controls. The bank’s liquidity management strategy must be submit - ted to the FSC and liquidity limits must be set to ensure adequate liquidity. The BVI does not have additional requirements applicable to systemically important banks. 8. Insolvency, Recovery and Resolution 8.1 Legal and Regulatory Framework The BVI legal system as it relates to failing enti - ties is principally a termination rather than a res -
cue regime. There is no equivalent to the Eng - lish administration or US Chapter 11 processes aimed at promoting the rescue of companies in financial difficulty under the protection of a statutory moratorium. Where a company is insolvent, a liquidator may be appointed by the court or by a resolution of a 75% majority of shareholders to collect, real - ise and distribute the assets of the company to creditors under court supervision. The liquidator must be a BVI-licensed insolvency practitioner. While the liquidation is taking place, the compa - ny is protected from claims by a statutory mora - torium. The appointment of a liquidator does not interfere with the ability of a secured creditor to enforce its security. Any assets not subject to security realised in the liquidation are distributed to creditors evenly in proportion to their admit - ted claims against the company. Following the conclusion of the liquidation, the company will be dissolved. A company in financial difficulty can seek to restructure short of liquidation either via a creditors’ arrangement under the Insolvency Act under the supervision of a BVI-licensed insolvency practitioner (if insolvent or likely to become insolvent) or a company scheme of arrangement under the Business Companies Act sanctioned by the court. Either process ena - bles a compromise to be agreed by the vote of a 75% majority of creditors to bind all creditors, including dissenters and those who did not vote. Creditors with different interests may be sepa - rated into classes, with each class requiring 75% approval to approve the arrangement. Neither process benefits from a moratorium while being negotiated. Provisional liquidators may be appointed on a “light-touch” basis over a BVI company in order
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